The third-largest operator of U.S. stock exchanges withdrew the IPO on March 23 after errors on its own computers kept the stock from trading and halted Apple Inc. Pulling the deal capped a day of embarrassments for the Lenexa, Kansas-based company, which rose to prominence with the electronic trading industry.
“This was a freak one-time event,” Cummings, 43, wrote in an e-mail sent to Tradebot Systems Inc. customers today. He left Bats, which he founded in 2005, to rejoin high-speed trading firm Tradebot in 2007. “American Capitalism is sometimes messy, but it is what makes this country great.”
Chief Executive Officer Joe Ratterman said in an interview yesterday that the potential for “uncoordinated and chaotic” trading after bad code corrupted its computers spurred Bats to scuttle the deal. Cummings, who serves on the Bats board, said employee bonuses should be suspended because of the failed offering.
“Ironically, the software bug itself is probably the easiest thing to correct,” Cummings wrote. “The fix should take less than a week.”
Bats was formed two months after the New York Stock Exchange announced plans in 2005 to go public by combining with rival Archipelago Holdings Inc. and Nasdaq Stock Market announced its purchase of Inet ECN. Archipelago and Inet were then the largest electronic communication networks, or ECNs, which match buy and sell orders and compete with exchanges.
`Work Very Well’
Cummings created Bats with 12 employees to counter the emerging NYSE and Nasdaq duopoly. Executives at Goldman Sachs Group Inc., Citigroup Inc., Merrill Lynch & Co. and other banks said in 2005 that the lack of competition after the purchases would hurt users by limiting their choice about how and where to execute orders and enabling exchanges to raise transaction fees.
“When the public wants to invest, they can push a button and get a fair fill in less than a second,” Cummings wrote today. “The markets will never be perfect, but the reality is that they work very well.”